President Trump recently said he is “not looking to renew” the U.S.-Mexico-Canada Agreement, which he negotiated to replace NAFTA. However, this is not the same as withdrawing from the agreement.
Both NAFTA and the USMCA include provisions allowing any party to withdraw with six months’ prior written notice. Trump repeatedly threatened to withdraw from NAFTA in 2018 when the USMCA was under discussion, presumably to provide an incentive to conclude that agreement.
By contrast, the current USMCA review process is distinct from agreement termination. When the USMCA went into effect for a 16-year term in 2020, the three parties agreed to a review process after six years. This review may be concluded by either agreeing to extend the USMCA for another 16 years, with any agreed changes, or a transition to annual joint reviews for the next ten years.
Formal talks ahead of the first review, which is slated for July 1, have begun with Mexico only, though informal talks are reportedly taking place with Canada as well. The White House has announced some of its goals for these talks, including tighter rules of origin and regional production requirements.
That sounds like a plan for new agreed provisions, not USMCA termination.
It’s important to remember that the president’s comments are not always official government policy. Trump prides himself on finding leverage as a dealmaker, so his public skepticism about the USMCA may be an effort to provide leverage to his trade negotiators. Hopefully Canada will soon be added to the formal process so that trade officials from all three USMCA parties can update the agreement in a way that provides greater certainty for businesses, workers, consumers, and farmers.
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